Slater & Gordon’s profit up 21 per cent

Listed law firm
Slater & Gordon
has posted a record profit of $23 million in its latest half-yearly results, despite a predicted fall in revenue from class actions.

Slater & Gordon managing director
Andrew Grech
told TheAustralian Financial Review he felt the firm was “on the right track and making the right decisions" in investing shareholder money, particularly given the scale of opportunity available in Britain.

Revenue for the final six months of 2013 was up 22.3 per cent to $178.3 million and net profit increased 21 per cent to $23 million.

The rapid acquisition growth in Britain since late 2011 when the nation relaxed rules around non-lawyer owners, helped propel the firm’s revenue.

Throughout 2014 the British side of the business is expected to generate $155 million in revenue, Mr Grech said.

This included $84 million from Russell Jones & Walker (now trading as Slater & Gordon UK) which was acquired in April 2012, plus another $71 million from further acquisitions last year.

Despite the hype and high profile of both the industrial relations and class actions sections of the law firm, both are considered boutique practices which add less than 5 per cent to its overall financials.

“These are both very boutique specialised areas you know its always been the case that people have mistakenly believed the class actions practice was a lot bigger in revenue than it in fact is," said Mr Grech.

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“It’s only ever been, in revenue terms, a relatively small part of the overarching business."

Earlier this month a settlement in the Thalidomide class action which the firm was acting on – a drug which damaged unborn children when taken in early pregnancy – was approved by the court for $89 million.

Despite that, Mr Grech said he expects 2014 revenue from class actions to be down from the previous year.

This year, he said, was more about rebuilding the company’s pipeline of claims.

Despite accounting for less than 5 per cent of the firm’s overall revenue, Mr Grech said the area was “important because it allows us to help thousands of people at one time … which is a phenomenal way to help people access the legal system."

The recent Abbott government announcement of a royal commission into corruption in the union movement is also not expected to significantly buoy the firm’s billings or revenue.

“In a business of our size and scale the work that we get from trade unions would be less than 2 to 3 per cent of total revenue," Mr Grech said.

“So of course they are significant clients and of course we expect this to be a very busy time for lawyers in our industrial unit, its not material or significant in terms of financials."